Blast from the Past: Nike One Line

Ever spotted fake Nikes? The world’s largest fashion company is no stranger to tons of fake products, but the first ever company to bootleg Nike was …..drumroll… Nike itself. 

Phil Knight’s Nike has seen several interesting incidents in its 60-year history, right from how he paid a young Carolyn Davidson $35 to design the iconic swoosh, to paying the NBA $5000 per game when the Jordans broke the “51% white shoe” rule - and some of these crazy stories have been explored in Ben Affleck’s 2023 directorial “Air.” Today, on Episode 1 of BizKrispies Originals’ Blast from the Past, we dive into the legend behind the Nike One Line.

This dates back to the 1980 US Customs Tariff Bill. Provisions of the bill put Nike under an obligation of $25 million, causing a public battle between the company and the United States Government. That amount would’ve been enough to force the giant to shut its business, but how they muddled their way around the laws to save themselves is what forms the plot of this episode. While the fight between Nike and the US Govt. was pretty known back in the day, it gained public attention upon the release of Phil Knight’s 2016 memoir, ‘Shoe Dog’ where he explained how the One Line was created to contest an obscure rule in the US Customs Code. 

Knight says that the $25 million bill was an outcome of competitors in the shoe and rubber business lobbying with the Government to bring Nike down. Much like other typical government confusions, the American Selling Price Rules of 1922 stated that customs tariffs would not be determined by the manufacturer’s cost of the good, but by the price of a similar American-made product. Duty in the three categories of benzidine chemicals, cherry stone clams, and athletic footwear with synthetic uppers could be assessed on not the factory cost of the goods, but the American wholesale selling price of goods that were like American manufactured goods. 

With respect to these rules, calculating the tax obligation on the basis of the cost of a competing high-priced product, the government presented to Nike an order to pay dues of $25 million. The scenes at the headquarters were a sight Knight remembers to date, everyone running around and panicking, and the legal team rampantly flipping through tons of books and archives to find loopholes and precedents, and eventually, they did. 

The team at Nike designed a new blue running shoe with nylon uppers, priced it dirt cheap (marginally above cost), made only a few pairs and called them the One Line. This was basically a one-to-one knockoff of the 1980 Oceania runners minus the Nike branding elements. Knight says, “It was a knockoff, dirt cheap, with a simple logo, and we manufactured it in Saco, at Hayes’s ancient factory. We priced it low, just above cost. Now customs officials would have to use this ‘competitor’ shoe as a new reference point in deciding our import duty.” 

The low cost of the one lines and the similar design to Nike shoes perfectly manipulated the laws. The product being American-made served as the new reference for the Government in determining the customs dues, and that saved Nike. Sighs….pretty complicated, but that is what makes the “One Line” the rarest shoes ever produced by Nike and is why the $138 bn m-cap company is still alive and kicking.

References:

• Looka

• Complex

• Shoe Dog - Phil Knight

• The Deffest